Gold And Silver Imports Get Costlier As Duty Rises To 15%; Kalyan Jewellers, Senco Lead Stock Slide

Import duties on gold and silver have been hiked to 15% from 6% through official orders issued on Wednesday, 13 May 2026, in a bid to curb imports of precious metals and ease pressure on the country’s foreign exchange reserves.

The new structure includes a basic customs duty of 10% and Agriculture Infrastructure and Development Cess (AIDC) of 5%, making the total effective import tax at 15%. The revised rates are effective immediately.

Why The Government Has Moved Now

The timing is closely linked to the ongoing West Asia crisis, which has pushed up oil prices and put pressure on India's external balances and currency. With the rupee being one of the weaker-performing Asian currencies in recent months, policymakers have been looking to clamp down on non-essential imports. Gold sits high on that list, given that India is the world's second-largest consumer of the metal and meets nearly all of its demand through imports.

This is not the first move in that direction. The government had earlier imposed a 3% integrated goods and services tax (IGST) on gold and silver imports, which led banks to pause shipments for over a month. As a result, gold imports in April hit a near 30-year low. Banks have since resumed buying after paying the 3% IGST, but dealers say imports are likely to fall again after this duty hike.

The decision also lines up with Prime Minister Narendra Modi's appeal on 10 May, where he urged people to avoid buying gold for a year to help conserve foreign exchange and ease the pressure on reserves.

Jewellery Stocks Take A Hit

The duty hike triggered a sharp sell-off in jewellery counters. Kalyan Jewellers was the worst affected, falling 6% to its day's low of ₹340 on the NSE. Senco Gold slipped over 3% to ₹302, while Thangamayil Jewellery also dropped more than 3% in early trade. Titan held up relatively better, down around 1%.

In the near term, higher duties are likely to push up domestic gold prices, which could weigh on consumer demand. Costlier jewellery may also prompt buyers to delay purchases, particularly at the lower end of the market. That said, organised players with stronger brand recall, tighter inventory management, and higher customer trust may be better placed to ride out the slowdown compared to smaller, unorganised jewellers.

What The Industry Is Saying

Reactions from the bullion industry have been mixed. The India Bullion and Jewellers Association, said the move was on expected lines, given the government's focus on managing the current account deficit. He added that demand could take a hit since gold and silver prices were already running high.

A bigger concern flagged by dealers is the possibility of smuggling making a comeback. Smuggling had eased after India cut import duties in mid-2024.

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Demand Picture

Despite all the headwinds, gold demand has actually been on the rise, especially on the investment side. With equities delivering negative returns over the past year and gold prices rallying, investors have been pouring money into gold exchange-traded funds (ETFs).

Inflows into Indian gold ETFs jumped 186% year-on-year in the March quarter to a record 20 metric tonnes, as per data from the World Gold Council.

While the higher duty is expected to dampen physical demand and support the rupee, its actual impact on consumption, the jewellery trade, and informal channels will be something to watch closely over the coming months.

Sources:

The Hindu

BW BusinessWorld